Tuesday, March 20, 2012

Beginning this week, and with this post, I'll be writing a bi-weekly column for The Daily Beast's "Zion Square," appearing Mondays. The blog is edited by The Daily Beast's senior political writer Peter Beinart and aims to reshape discussion of Israel and the Palestinian conflict for American readers.

Three weeks ago—just while Benjamin Netanyahu was preparing for his Palestineless AIPAC speech—I accompanied a team of about thirty Chinese businesspeople on a visit to the West Bank, led by a former Duke colleague, Liu Kang, now also the dean of the Institute of Arts and Humanities at Shanghai’s Jiao Tong University.
It was kind of tour d’horizon for uninitiated but intrigued foreign investors—“some billionaires,” Kang assured me—shoe and leather manufacturers, toy exporters, equity-fund managers, people by now accustomed to seeing the world as their market, if not their oyster.

They trouped obediently to one bus-ride after another, shuttling from Ramallah’s Movenpick (“our velvet prison,” as one Palestinian entrepreneur calls the hotel) to the territory’s leading businesses, hearing welcomes and lectures from executives of, among others, Paltel, the nearly billion dollar telecom company, Padico, the large holding company, the Palestine Investment Fund, the sovereign wealth fund, Pharmacare, the generic drug manufacturer, and leading banks, exposing themselves to various (in some cases, superb) executives I have known for some time and written about before. The PowerPoints were sharp, the numbers, not-too-shabby, but weakening, the message: invest, partner, help.

You squint, and you can almost see what the Palestinians’ state would look like—that is, if Palestine’s managers and entrepreneurs could pursue more or less freely the larger national goals implied by their organized commercial efforts—not always free of petty corruptions and influence peddling, to be sure—but the spine of Palestine’s civil society, rooted in the rule of law and government regulations, disciplined by genuine competition and international partnerships and standards of practice.

The problem comes when you stop squinting and let in the ambient facts—the incipient regional violence, and worse, the reality of occupation. The World Bank just released its latest report on the Palestinian economy, called “Stagnation or Revival.” The trend is discouraging. The PA is in an unprecedented crisis, in need of $1.5 billion in donor support for its public sector and raising only about $800. Private sector growth slowing and cannot make up the difference. Fayyad tried to close the deficit by raising taxes—which all sides around him rejected. The PA is less and less able to pay what it owes the private companies it’s contracted work from and yet also pay its police and teachers.

Netanyahu speaks of “economic peace” laying the ground for eventual compromise, but the PA’s fiscal crisis can be laid at his door.

Fayyad may eventually squeeze more out of Norway, etc., but the only sustainable way out of the crisis is a rapid expansion of Palestine’s private sector, which desperately needs what Israel got in the 80s and China in the 90s, direct foreign investment from global companies—not just money, but know-how and know-about—and, even more important, the free movement to Palestine of talent from the US and elsewhere, the back-and-forth movement of ex-pat managers from partnering companies, the movement of supplier components and finished goods, if only through Jordan.

There are over $12 billion in Palestinian bank deposits in Jordan, and another $8 billion in the territories themselves, never mind the tens of billions is in sovereign wealth funds in the Gulf. But Palestine needs greater bandwidth so that Paltel can finally set up the 3G data network it’s been lobbying for. It needs an unobstructed transportation corridor to move goods and people internally.

But Netanyahu’s government has, if anything, made these conditions for growth more remote than ever, severely controlling access to the PA’s territories. And, meanwhile, the IDF enters its towns with impunity, looking for and jailing “militants,” making Fayyad and the PA seem like Quislings. As one Chinese investor put it, “financial capital exists, but intellectual capital is choked.”

Netanyahu says that he wishes, sincerely, to work toward a Palestinian state, just not one that will endanger Israel’s “security.” But behind the PA is a kind of bourgeois revolution Israel should encourage—and does not. The business class lives mostly in the political background, and their wealth can be as much resented as admired, depending on how fairly it is assumed to have been accumulated, and how productively it is put to the nation’s use. Yet they project a demonstrably plausible development path for Palestine, one that mirrors what Palestinians are already creating in Jordan—another miracle in the desert, a steadily growing Arab economy not based on oil.

Fayyad’s state-building in the private sector is, in other words, a net gain for Israeli security as much as for Palestinian hope. The two countries, together, will be city-states about the size of greater Los Angeles. Palestinian businesses are part of a single commercial ecosystem, and promise to give employment to young people (Palestine’s median age is nineteen) who would otherwise be unemployed and only nursing furious national grievances. Palestinian businesses have the potential to partner with Israelis on everything from tourism to regional telecom.
Israelis may bridle at the vision of a Palestinian state which looks like militias riding in on Jeeps and firing-off rifles. But what about businessmen riding out in sedans and firing-up laptops?

Why, if Israel were serious about an eventual two-state deal, would Netanyahu (and AIPAC, for that matter) not do everything—conspicuously, symbolically—to help these businesses succeed? The facts on the ground not created by Palestinian businesses are obstacles to peace just like the facts created by settlements are.

“The world will eventually turn against you,” one Chinese equity fund manager told me. “The Arab world can wait you out, the anger over Palestinian poverty and suffering will isolate you.” One would think such cautions would be obvious to Israelis, of all people, whose globalized economy depends so completely on international goodwill, knowledge networks and open access. One would think Israelis would understand the opportunity cost, and moral hazard, of denying these things to Palestinians.

10 comments:

Y. Ben-David
said...

It's always somebody else's fault, never the Palestinians, never the Arabs. Somebody else....the 'occupation'. It must be Israel's fault. Wasn't Hong Hong occupied by the British for 150 years? Didn't they build a prosperous economy in spite of that. Of course, there are differences, the Chinese in Hong Kong didn't have an ideology that called for the eradication of the United Kingdom, the residents of British Hong Kong devoted themselves to building their economy instead of suicide bombers and rockets as the Palestinians have...but still the Palestinians achieved a faster growth rate after the Israelis took over in 1967 than they did under the rule of their brother Jordanian Arabs before the Six-Day War.

Now we hear that "if only the occupation ended, the Palestinians economy would take off". Well, is their ANY successful Arab economy that is not based on oil? How is Egypt's economy? How is Jordan's? All are dependent on international handouts and lucky things like the geographical situation that enabled the Suez Canal to be built (by those evil European colonialists no less!).So it seems the problems are more deeply rooted that simply "the occupation", as indeed Dr Avishai points out.

Dr Avishai seems to think that Israeli wants the Palestinians to "suffer" and if only this irrational suffering supposedly inflicted on them, everything would be all right?Maybe the solution lies with the Palestinians....developing a peace and life culture instead of glorifying terrorists and death, as they do now (Amira Hass in Ha'aretz interviewed a Gaza Arab who admitted the rocket attacks do no good for them, but he admitted he simply wants the pleasure of killing Jews). Maybe they have to review the common belief that as Muslims, they are destined to be the masters of the world and that everyone else is going to serve them.Only when their society is really willing to take a hard look at theselves, as the Japanese and Germans did after World War II and work to create a new view of things, and free themselves from obsessive dwelling on ancient grievances, will the Palestinians and other Arab country be able to provide a decent life and opportunities for their people. They should look in the mirror for their salvation, not imaginary "enemies".

I happen to know for a fact that the information the IDF uses to arrest suspects in the West Bank COMES DIRECTLY FROM THE PALESTINIAN AUTHORITY. Those picked up are HAMAS people who the FATAH-controlled Palestinian Authority wants to get rid of so they have Israel do the dirty work for them. Regarding the PA's deficit....Dr Avishai mentioned that the Fayyad wanted to increase taxes. This was rejected. Who wants to pay taxes? If the Palestinians do not want to pay for services, what is their first reaction? Start whining about how they are "suffering under the occupation" and how "the extremists will take over if you Europeans and Americans don't keep giving us handouts". Most countries in the world have to make it financially on their own (Greece thought for awhile they could keep sucking money in from the EU, but we all see what that lead to) but the Palestinians and others like Egypt have the West over a barrel and keep coming and demanding to be bailed out "otherwise the extremists will take over". Does anyone really think a healthy economic system can come out of such a mentality?

Ben-David says: (Amira Hass in Ha'aretz interviewed a Gaza Arab who admitted the rocket attacks do no good for them, but he admitted he simply wants the pleasure of killing Jews).

This comes from desperation, no hope for the future and normal life as they see Israeli's living normally and oblivious to Israel's heavy foot on Palestinians.

Ben-David again: Only when their society is really willing to take a hard look at theselves, as the Japanese and Germans did after World War II and work to create a new view of things, and free themselves from obsessive dwelling on ancient grievances, will the Palestinians....

I don't believe Israeli's take a hard look at THEMselves and how they work against their own security. Nor are they free from this obsessiveness about ancient grievances---hardly.

Potter-You pathetic attempt to justify Palestinian self-destructiveness with lies like "they have no future" only proves that they will never get out of the spiral of self-pity and eternal grievances that have brought them nothing but a dead end.It is a lie that they are desperate and have no future. The Palestinians get the most foreign aid of any people in the world per capita and the Gazans get their share. Today, Gazans have a higher standard of living than do Egyptians and most other Arabs in the non-oil producing states. When Israel pulled out of Gush Katif in 2005, they offered to turn over the highly productive agricultural facilities the Jews built there. The Gazans DESTROYED them. Billions of dollars of development was promised, but HAMAS rejected it, preferring to fire rockets at Israel. Israel has REPEATEDLY offered to create an independent Palestinian state in which Gaza would be opened up and free access to the West Bank guaranteed, but, again, HAMAS and the main Palestinian Authority have rejected the offer. THEY HAVE NO ONE BUT THEMSELVES TO BLAME FOR THEIR PREDICAMENT IF THEY DON'T LIKE IT. Any people that views killing Jews as its main national objective instead of national development deserves what it gets.

The lie is that Israel offered to create an independent Palestinians state. We know that the disengagement of Gaza which you mention was designed, not for peace, as it was unilateral, but to PREVENT that. Shame on you for peddling these goods. Israel does not want a Palestinian state.

And no wonder that some Palestinians are so angry. The occupation continues- in Gaza, in the West Bank. No economic development is possible without sovereignty and the freedom to move, to do business.

A risk? Yes- but the present course is more risky for Israel. Iran's supposed threat (which the occupation gives fodder to) has taken the agenda.

By STEVEN ERLANGERPublished: July 15, 2005JERUSALEM, July 14 - About half the greenhouses in the Israeli settlements in Gaza have already been dismantled by their owners, who have given up waiting to see if the government was going to come up with extra payment as an inducement to leave them behind, say senior officials working on the coordination of this summer's Israeli pullout from Gaza.

I don't know if you can get the whole article from 2005 NYTimes archive linked above.

So unless they were paid, settlers were going to destroy the greenhouses. Some of them did.

Any people that views killing Jews as its main national objective instead of national development deserves what it gets.

This is NOT coming from a "people". This comes from angry individuals, radicals. You don't mention the West Bank. which makes BAvishai's point.

It's totally unreasonable to claim that after 38 years of occupation ( ongoing) that a unilateral withdrawal in Gaza with NO agreement for peace or plan for a state nor settlement of issues was going to placate anger and make people just forget their losses. Hoe could it have been expected ( as it was) that the aggrieved would settle down, simply move into settler homes and greenhouses? It's a clueless POV.

You focus your argument on Gaza. Israel has held this area under siege. You point to a standard of living, which depends on welfare and smuggling.

All or nothing....endless grievances....they didn't offer enough....fight forever....Muslim pride....never compromise......make them suffer....sacrifice this generation and the next and the one after than until every last demand of ours is met.

Correspondingly, Israel's extremists, extremist sympathizers and those in power now are willing to do the exact same thing: they want it ALL and will wait it out, hoping against hope that eventually Palestinians will leave.

With regard to REAL compromise, justice, international law- that is no matter. "We deserve it, we won." "THEY want to destroy us." and "THEY HAVE NOONE BUT THEMSELVES TO BLAME"

This hands Israel's security problems to the next generations which will be dealing with an increasingly democratic and Islamist neighborhood. If winning wars is the arbiter of justice, you should look forward to more war and becoming,in the process, if the country survives, more of a FORTRESS with no one else to blame for this course.

I have no quarrel with (what has been) Bernie's righteous take on the needs of Palestinean economic development that Israel seeks, or at least manages, to stymie -- but to know what one does about the Chinese: internally, in Tibet, in Africa, in Hong Kong.... please!presenting them as spokespeople for humane development that serves human needs is something to gag on.

Praise for The Hebrew Republic

"Inspired and highly informative: a stunningly fresh narrative of a century old conflict."

Amos Elon, Author of The Pity of it All, Herzl, and The Israelis

“Avishai’s book is essential reading for anyone seeking to understand not only the genuine complexity of the Israeli-Palestinian conflict but also the real prospects for a sane and peaceful outcome."

Dov Frohman, Founding CEO, Intel-Israel

"During the past two decades, Professor Bernard Avishai has emerged as one of the most eloquent and penetrating analysts of the Israeli scene: of its politics, international relations, religious confrontations, and social fabric; of its national triumphs and failures; of its collective hopes and looming perils. This volume can only add to Avishai's reputation. The Hebrew Republic is indispensable reading even for veteran students of the Jewish State."

Prof. Howard M. Sachar, author of A History of Israel

"If justice and reason still count for anything, "The Hebrew Republic" will profoundly change the Middle East conversation, both here and in Israel. If the notions of a Jewish state and a democratic society sit uneasily together -- if they are, in some sense, thesis and antithesis -- then Bernard Avishai has brilliantly deliniated the indispensable synthesis. This is an exciting and supremely important book."

Hendrik Hertzberg, Senior Editor and Staff Writer, The New Yorker

“Anyone who cares about Israel, the Palestinians, or peace should read The Hebrew Republic—a comprehensive analysis, a compelling vision, a wrenching cri de coeur. Of all the brilliant, brave voices heard here—and there are many—none is as indispensable as Avishai’s, with this book, has now become.”

James Carroll, Author of Constantine’s Sword and House of War

“Bernard Avishai offers a fascinating solution to Israel's existential dilemma: the choice between an ethno-national state, which discriminates against its many non-Jewish citizens, or a binational state that loses its Jewish nature. The book scrutinizes the flaws of Israeli democracy, but is written with a deep love, and provides an upbeat and highly original analysis of the potential of Israel’s new economy. It is a must for anybody who wants to understand today's Israel.”

Prof. Yoram Peri, Head of the Rothschild Caesarea School of Communication, Tel Aviv University, Author of Generals in the Cabinet Room

"The central issue in bringing about peace in the Middle East is whether Israel and the Israelis can find their place in the region where they have carved out their homeland in a manner that is acceptable to others in the region, within and beyond their borders. Bernard Avishai confronts Israelis with the fundamental questions, which only they can answer, and which they cannot indefinitely turn their backs on, about who and what they are. It is hard to imagine clever third-party efforts succeeding as long as these questions remain unanswered. He has made a lucid contribution to solving one of the great problems of our time.”

Amb. Alvaro de Soto, Former UN Special Coordinator for the Middle East Peace Process